(In picture: Hemant Kanoria. Source: Reuters)
The Bombay High Court, on October 7, dismissed SREI Group's plea against the Reserve Bank of India's (RBI) action on SREI Infrastructure Finance Ltd (SIFL) and SREI Equipment Finance Ltd (SEFL).
SREI Group promoters, Adisri commercial private ltd, had filed a writ petition against the RBI challenging the order and had also sought a stay on initiating insolvency proceedings against SIFL and SEFL.
While dismissing the petition, the court said that it will give the reasons later
In an exclusive interview with Moneycontrol on 8 October, SREI founder Hemant Kanoria said they were only trying for a resolution outside the IBC mechanism to avoid a huge haircut to the lenders. SREI owes around Rs30,000 crore to its creditors. The group faced a crisis because of severe liquidity crunch, non-payment by borrowers and inability to get investors on board on time.
There was a statement from you saying you are exploring various other legal options after the HC order…
We are not exploring any legal options.
What is the next course of action?
The RBI will be taking the action no? Because they have already superseded the (SREI) board. So, now the RBI will be taking a decision on what will be the next step.
We have seen similar actions from the regulator, say in the case of Lakshmi Vilas Bank. Are you not planning to move to SC?
No. We are not. See, we wanted a resolution to happen. Today also, when we moved the High Court, we asked for a resolution. We said time would be given for the two investors who are already there. If their proposals get accepted, if they are fit and proper, then the problem will get solved. Then it doesn’t have to go to IBC. The RBI did not accept that. So we had not asked to dispute what RBI was doing. We only asked for resolution.
So you have not moved HC today against the RBI decision..
No. We have not moved against. We said you stay the IBC proceedings till the time the investor, already given the proposal, their proposal is accepted by the RBI. Because we had, from the board of SREI, proposals of the investors had gone. Already, the present promotions were getting diluted. RBI had asked for all the fit and proper details and the applications had gone. We had only said that because the application had gone, let the RBI evaluate that and given them the approval, then the resolution had already happened. Then you don’t have to take it to IBC.
Is it not? That was our proposal.
You have been trying to get investors for a considerably long time now..
We have been trying to find a resolution. Today also, the application was made only towards advancing the resolution and see whether the resolution can happen without IBC. Our only approach has been since the beginning, since October 2020, we have been trying to see that without IBC, can we do the resolution.
Why not the IBC route?
Of course the advantage in such a resolution is that without IBC is that a haircut does not have to be taken. Otherwise people will take liquidation value. Haircut has to be taken. We have been the lenders. So we know that as lenders how painful it is to take a haircut. In IBC, there will definitely be a haircut. That is why we have been trying to explore all the options for a resolution besides IBC so that it will be good for the banks and creditors.
So it is confirmed that you are not going to challenge the RBI's decision in the Supreme Court..
No. Not at all. We are not going to do it.
So, you will wait for RBI action to take its course..
We want a resolution. The best way for resolution, as I told you, is the normal resolution course which is dialogue, which is basically finding out solutions. But, it has not worked out. Therefore, the next step is IBC. We moved HC for stay of IBC proceedings for next few weeks till the investor fit and proper is accepted by the RBI. If the RBI had accepted the fit and proper, then there was no use of moving to IBC. That was our proposal. RBI did not agree on that. We tried till the end. Our objective has been that no haircut should take place to the creditor. We tried in the Bombay High court for resolution to happen. It was not accepted.
We will go along with the RBI’s decision and the government’s decision because we have full faith in the country’s system.
After the RBI administrator took charge, did he ever reach out to you?
Not yet. It has just been three days.